Article

Is Bio Fuel Dead for Your Fleet Fuel Program?

We aren't going to say that just yet. But Congress has sure made it difficult for that market. As most of you know, the $1 a gallon tax credit went away at the end of 2009.

The credit expired at the end of 2009 and virtually shut down the industry, says the American Soybean Association. Roughly 11 percent of U.S. soybean oil is used in making the biofuel, which is a bolster for soybean prices.

What is interesting about all of this is the House and Senate have passed bills to renew the credit for 2010, now they must agree on a common text to send to the president. "Neither the House or Senate has signaled any particulars on how they will do that," said Michael Frohlich of the National Biodiesel Board, a trade group.

Our Congress, not agreeing with each other? Who would have thought that could happen? It wasn't that long ago that the $787 billion federal stimulus package last year included $79 billion for renewable energy. In January, President Barack Obama awarded $2.3 billion of that money in tax credits to renewable energy companies.

The tax credit is one provision in a $149 billion bill focused on job creation and extension of tax incentives. Remember these are the jobs that are supposed to help get the economy going. Right now the bio industry is having a hard time getting your fleet of trucks moving without the tax incentive. Like most new programs, this one needs a little boost from Uncle Sam to get off the ground.

I believe Congress knows that it is important, but don't expect to see anything soon. Why? Springbreak! Yes, resolution is unlikely before mid-April, said two biofuel officials. Congress soon will recess until April 13th, they noted, and a final vote on the credit could be delayed until late April or later, depending on the pace of House-Senate negotiations. It would be a nice thought if it were to pass on or right before Earth Day (April 24, 2010).

We have all been sold on how wonderful biodiesel is, and I am not arguing. It just reminds me of someone pulling a chair out from under you when you go to sit down. Biodiesel production is forecast at 800 million gallons this year as federal mandates require minimum amounts of the fuel to be mixed into diesel by blenders and refiners.

In addition, revival of the tax credit would be retroactive to Jan. 1, which adds some incentive to make the fuel, only if the tax credit is retroactive and I believe it will be. But isn't that a pain? The industry has, for at least four months, been turned on the side of its head. Then we have retroactive tax credits, but I don't think they are going trickle down to the trucking side of the world. If you paid for fleet fuel without the tax incentive in it, it would be hard to believe they would let you credit that back. We never say never though, since crazier things have happened with Congress.

Let's stop the talk about green jobs and doing something about it. Don't let tax incentives that are important to a new and growing industry just die. Biodiesel burns cleaner, it's American made, it has more lubricity in it to help with Ultra Low Sulfur diesel, it creates jobs, etc. Let's get our fleet fuel programs running again with biodiesel.